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Noront offers Wyloo an opening to deliver its takeover pitch

Ring of Fire explorer will clear the path for Australian miner to make a binding offer
Noront Esker Camp sign 5
(Noront photo)

Noront Resources is opening a crack in the door for Wyloo Metals to make a formal takeover offer for its Ring of Fire mineral assets.

The Toronto-based nickel and chromite exploration outfit said in an Aug. 31 news release that it's willing make a concession to give the Australian mining company fair access to confidential inside information in order for Wyloo to make a direct pitch to Noront shareholders.

Wyloo, a 37 per cent shareholder of Noront, is making a hostile takeover bid against a friendlier offer by its Australian mining rival BHP to gain control of Noront and the right to claim one of the richest untapped nickel and base metals project in the world.

The prize is Noront's Eagle's Nest nickel deposit, sitting on a largely untapped and isolated mineral exploration property, 500 kilometres northeast of Thunder Bay.

Privately-owned Wyloo announced in May it wanted to acquire all of the common shares of Noront it currently didn't own in a proposed $133-million transaction.

The situation puts plans for a ferrochrome processing plant in Sault Ste. Marie up in the air as Wyloo has said it would do its own independent study on the matter.

The Perth-headquartered Wyloo said it was informed that BHP was formulating a bid to acquire some of Noront's greenfield assets in the Ring of Fire area of the James Bay region, and it wasn't willing to give BHP a "strategic toehold." 

In a blustery broadside against Noront's board of directors this week, Wyloo sweetened its May offer from $0.31 cents per share to $0.70, bettering BHP's $0.55 per share takeover bid price.

But Wyloo claims it's been stymied by the Noront board, accusing them of denying access to internal company documents as part of its due diligence work.

Wyloo further threatened this week to toss the entire Noront board if shareholders ultimately accepted its bid.

Noront contends Wyloo hasn't made a legitimate offer yet to shareholders, but rather a "non-binding proposal" to the board.

At issue is Noront's insistence that Wyloo sign a confidentiality agreement to do its due diligence, a practice Noront said is customary for proposed transactions of this scale. 

Noront said this is same standard confidentiality agreement that BHP signed prior to that mining company making its takeover proposal in July, an offer that Noront's board is siding with. 

Noront said Wyloo was given the opportunity to sign the agreement but has refused to do so.

A sticking point with Wyloo is a 'standstill' provision within that agreement that the company said prevents them from making their offer directly to Noront shareholders and further restricts their rights as shareholders from proposing nominations to Noront's board, something Wyloo deems "unacceptable."

Noront now responds that it's willing to waive that provision in order to allow Wyloo to do its due diligence, in the interests of Noront shareholders. But first, Noront sought permission from BHP, which has agreed to waive this requirement. 

"With BHP's consent," said Noront CEO Alan Coutts in the news release, "Noront intends to provide Wyloo with a confidentiality agreement in the same form as Noront's confidentiality agreement with BHP, but without the customary standstill provision. 

"This will allow Wyloo to complete the due diligence that Wyloo claims is required, and to decide whether or not to make a binding offer to acquire the common shares of Noront that Wyloo does not already own."

In the release, Noront cautioned shareholders there are no guarantees that any sale "will crystalize from the Wyloo proposal."

Noront's response came a day after Wyloo took a confrontational stance against the Toronto junior miner, jabbing the company for its dearth of exploration funds and its lack of meaningful activity on the ground over the last decade to expand the project's mineral potential.  

Wyloo contends if Noront shareholders accept its bid, new leadership will unlock the value in the Ring of Fire under a board led by the boss of its parent company, Andrew Forrest, head of Tattarang, one of Australian's largest private investment firms.  

Noront's board is favouring the BHP offer, determining that the offer is "fair, from a financial point of view, to Noront shareholders and in the best interests of Noront and its shareholders."